In many audits of sales transactions, no substantive tests of transactions are performed for the completeness objective because:
A) understatements of assets and income are a greater concern than overstatements.
B) it doesn't matter if income is understated, because the savings on income tax offsets the reduced revenue, so net income is correct.
C) the unrecorded sales cause a reduction of accounts receivable; therefore, the ratios of the two financial statements will not be misleading.
D) overstatements of assets and income are a greater concern than understatements.

Question

Quizplus · Accepted Answer

Overstatements of assets and income are generally considered a greater concern for auditors than understatements, as they can lead to inflated financial statements and potential legal or financial consequences. As a result, substantive tests of transactions may focus more on ensuring that recorded transactions are accurate and complete, rather than detecting any potential understatements.

In Many Audits of Sales Transactions, No Substantive Tests of Transactions